The transforming growth factor-beta (TGF-beta) family of morphogenic peptides (which includes bone morphogenic proteins-BMPs-Xnrs, Xolloids, etc.) must be proteolytically cleaved in order to be activated. The proproteins of these peptides are cleaved by a small group of serine proteases. Once cleaved, the peptides either diffuse extracellularly or are kept close to the secreting cell by being bound to membrane-associated proteins. The mature peptides signal by binding to specific receptors (I and II) in target cells, which results in the Ser/Thr phosphorylation of Smad proteins. These in turn enter the nucleus to act as transcription activators. This application proposes to characterize proprotein convertases (PCs): (1) by determining the sequence of in vivo cleavages in the proprotein BMPs; (2) by identifying the specific PCs responsible for processing Xolloid; (3) by examining the localization of specific PCs in the developing Xenopus embryo; and (4) by determining the functions of specific PCs during early embryogenesis.